Tragedy clouds prospects for tourism industry in region

Last week's tsunami disaster, in addition to the terrible human cost, will have serious negative consequences for the region's tourism business.

The annual visitor total to the four destinations hit hardest - India, Indonesia, Sri Lanka and Thailand - was about 21 million last year, with Thailand welcoming 12 million of them. The winter season, broadly November to March, is the busiest for all but Indonesia.

In India, most foreign visitors go to the northern part of the country, around New Delhi and Mumbai. However, there is usually strong domestic visitor business in the south and certainly to the devastated Andaman and Nicobar islands.

The area in Indonesia worst hit - Aceh, in the north of Sumatra - counts few foreign visitors, under 5 per cent of Indonesia's total, so in theory the country's visitor business will be less hurt.

Visitor business in Sri Lanka will be hit hard as most tourist hotels stretch from the capital southwards almost to Galle.

Thailand's Phuket is probably the worst-hit tourism centre but it represents less than 25 per cent of the country's total visitor business.

Elsewhere, Malaysia's visitor data requires more complex interpretation but physical damage in the main tourist destinations on the west coast, such as Penang, is slight. Indeed, Malaysia may gain visitors - some diverted from Phuket, for instance.

The Maldives may eventually be hit harder than it appears at present because most of its visitors are tourists - over 90 per cent compared with 70 per cent or less for the other destinations - and for them, infrastructure is essential. Many islands comprise only hotels, which, if damaged, render the host island uninhabitable.

Many visitors who planned to visit tsunami-wrecked resorts during the rest of the peak season will cancel or change their plans. A fall of 10 per cent in annual visitor numbers is likely, translating into at least US$2 billion in lost revenue across the region.

The damage is difficult to estimate, because traveller sentiment plays such a large part. For example, will travellers who planned to visit Phuket now switch to Pattaya? Or the Caribbean? Or to other destinations in Asia?

Will destinations untouched by the tsunami be 'touched' by the fallout from the tragedy?

The answer is probably yes - and they will probably gain. In the past, that answer would not have been so clear because 50 per cent of visitors would have come from outside the region - the sort of travellers who might have switched to a Caribbean holiday. These days, it is more likely that only about 30 per cent of visitors, many business travellers, come from outside the region.

Many Asian travellers will switch one destination in the region for another. For instance, the Philippines and Thailand for many years were contrary destinations for travellers from Hong Kong - when prices came down in one, the other lost out. In recent years, Thailand has steadily grown as the Philippines has lost its attraction, tainted by a perception of lawlessness. Now, that trend may reverse.

And the mainland island of Hainan might get the inertia-overcoming boost it needs. Officials have called it the 'Hawaii of the east' for the past 30 years but Sanya remains an unattractive, unkempt, dirty resort to which a burgeoning sex industry has brought a tawdry image. However, some upmarket hotels are now being built, which should improve the island's image, transforming it into China's Phuket - or maybe even its Hawaii.

Hong Kong has mainland visitors as a cushion - their number growing 49 per cent in the first 11 months of last year, 56 per cent of total visitors. Hong Kong may gain yet more - those diverted from Thailand.

Some important unknowns remain: Will this tragic event make travellers from outside the region frightened of Asia - particularly as this comes hot on the heels of Sars? Will there be some short-term resistance to beach destinations - and specifically those in Asia?

Poor sentiment may decimate bookings even in the case of physical recovery.

Compiled by Murray Bailey, research director and editor, Travel Business Analyst